Two funds managed by Pythagoras Investment Management LLC have been lone bright spots in a market decimated by several scandals. According to the firm, its trend-following Pythagoras Token Fund and Market Neutral Fund, which don’t have any exposure to the price of any cryptocurrency at any moment, have both risen roughly 8% this year. The largest digital token in the world, Bitcoin, has decreased by over 60% this year.
“We do very well in bear markets, “Founder and CEO of Pythagoras, Mitchell Dong, remarked. “Our absolute-return funds will have good returns whether the market is up or down; whether it’s a bull market or a bear market.”
By concurrently purchasing the same cryptocurrency at several locations and prices, Pythagoras’ market-neutral fund engages in arbitrage, which enables it to buy low and sell high. According to Dong, its trend-following fund employs technical indicators to identify transient movements in the cryptocurrency market.
Sam Bankman-formerly-high-flying Fried’s cryptocurrency exchange FTX filed for bankruptcy in recent weeks, reminding investors of the earlier this year collapses of other digital-asset businesses and engulfing the sector in controversies. Other businesses were also affected by FTX’s demise.
Prior to the collapse of the exchange, FTX had a 10% investment in Pythagoras’ arbitrage fund. The business claims that after asking for a complete withdrawal of cash and only receiving roughly 7% of them, it decided to hedge by shorting the native token of FTX, FTT.
The FTX collapse caused a decline in cryptocurrency values, with Bitcoin falling as low as $16,000 at one time, much below its recent highs of around $69,000. Currently, the currency is trading for about $17,000.
The goal is to employ quantitative, technical indicators to attempt to identify upward or downward trends, “explained he. “When you spot an upward trend, buy when you believe that people’s mentality is that they believe it’s going higher. You go short when everyone is selling and the trend is downward.”
Dong started Pythagoras in 2014 after becoming interested in Bitcoin. Dong’s previous positions included managing hedge funds for more than 25 years and trading uranium and electricity contracts, among other things. “Holding and purchasing Bitcoin entails 90% drawdowns. My risk-return profile is not like that “said he. “I need consistent monthly returns of 1% to 2%, with no losing months. That is the objective.”
Other market-neutral retailers have also reported profitable returns this year, so Pythagoras is not alone in this. While coins frequently have significant upward leaps during bull markets, the technique is more appealing during negative markets, according to dealers.
The market for cryptocurrencies is still relatively new and is changing extremely quickly, which allows us to consistently provide profits “Added Dong. “In the world of crypto, there is drama every day and an adventure every week. In conventional finance, a paradigm change occurs every quarter and a decade every year.”
